MBA1685 Q&A Wednesday: How often should I increase my rates?
welcome to the show powerful business insights delivered every day with their daily tentative. Is lessons for the real world. I'm your host your coach or teacher. Omar's home almost all the co founder of the hundred dollar. Nba company visits training and community online over one zero zero nba dot net in. Today's episode is a q. And a. wednesday episode on our cuny wednesday episodes. We answer a questions from one of you one of our listeners. If you have a question you want to ask. Just email me over at omar at one zero zero. Nba dot net taste. Question is from doug and doug asks pale more. Love the podcast. I run a website. Development firm is just me in my virtual assistant been listening to you for over a year. Now and i got a question. How often should increase my rates. I haven't increased my rates in over eighteen months. My work is getting better and better. And i'm getting more and more clients. I don't want to turn away clients. They've been working with me for some time. If i increase my rates but at the same time i know i should be earning more with. Love your advice on this topic. Thanks so much duck. Doug thanks tracking this question. It's really really important to reevaluate your pricing. Especially if you're in the service industry especially if you're delivering the service you're getting better and better and you're delivering a better service so therefore your price should reflect that. This is similar to anybody. Who's in any job. A junior developer is going to get paid less than a senior one and experienced accountant or lawyer. Doctor will be more expensive than one just out of university hor medical school you get the point but in today's lesson we're going to really go deep. We're going to talk about increasing prices. How to do it but how often do it. And how much of an increase. You make me a lot to cover. So let's get into it. Let's get down to business. Support city show comes from start. Your first online business might all new ten part audio course on himalayan learning this is of course is to get you from zero to one. That's going to get you from thinking about your business to actually launching that business getting it out of your head and into the real world. Recover things like validating your idea creating your first product pricing it marketing financing your business even creating your business website and more check it out and himalayas dot com slash nba and use code nba to get a fourteen day. Free trial began the tamila dot com slash. Nba promo code nba. So doug asks on cuny wednesday. How often should i increase my rates. Last time doug increases rates it was all over eighteen months ago. So it's in my opinion time to do so. I actually think the maximum time. You should wait before you increase. Prices is eighteen months actually. I think you're just at the point where you really really really should be increasing prices. Especially if you're doing regular work this whole time the value you're giving your customers day in and day out now project after project is getting better and better every day and therefore you should be charging more for the increased value. I want to address A little bit of doug's of raising his prices he does own a ternary his existing customers. Ona discourage them from working with him again. I want to tell you from a customer's point of view. Who hires a lot of freelancers. That hires a lot of employees. If i work with somebody who delivers who. I come back and work with again and again. My biggest concern is not really them. Increasing the prices. My biggest concern is that they're not gonna be able to do. The work might have to find somebody else. That's really my worry paying a little bit more in order to get the same town. Does he get the consistency to get what i expect. Is a very very small price to pay. Many people. Don't realize that from a company's point of you from our point of view consistency is so important knowing what you're gonna get Having expectations and having them fulfilled this is incredibly valuable them so they don't wanna let that go and if you say hey My prices have gone up by raise. Gone up it's not out of this world. You know this is normal. Anybody who believes the service or create any kind of content. You know musician makes more money today than they did. Three years ago because they've gotten better as a musician or an athlete or any kind of professional. Like i mentioned a doctor lawyer. A service provider plumber and again from my perspective as somebody who's hiring somebody to do a service. I'm okay with paying more. If i'm getting good work done. I actually found that higher rates are not discouraging to actually things. I look out for actually want somebody who charges a bit more for example. Your website developers. Somebody comes to me and says hey you know. I charge eighty dollars an hour. You know that might seem expensive. But that person charges eighty dollars. An hour is experienced. The know what they're doing and they're probably going to be able to complete the project faster more efficiently And more accurately than somebody who's charging maybe half that forty dollars an hour depres is going to take a lot longer is going to have a lot more roadblocks and may not be able to do the project as well as somebody who is charging much more so sometimes you actually save money in the long run and serious buyers who aren't so price sensitive are the kind of customers you want to attract so in the long run increasing. Your prices are really going to help you. Increasing your rates so minimum increase their prices every eighteen months. You can even do it every year. But that's kind of my recommendation chain a year eighteen months now how to do this well. It's very simple the next time you engage with customer you can just mentioned it. Hey by the way last time this was my rate since then i've increased my rate. It's currently this over this project. It's going to cost x. Amount of money and stop talking or stop writing a lot of people that go on and on. Is that okay with you. I hope that's okay once you is that okay with you. Ask a question. Is that okay. That is opening up a negotiation. Because they can say well actually you know if you just say it as a fact. This is my right now. This is how much it cost now. And there's no question at the end of it people gonna be like okay. That's what i gotta do now. Many service providers have done a to type pricing strategy to. I think is really good Actually increase the prices for new customers at one rate and recurring customers or a returning customers than others. So for example they'll take their rate in the increase by twenty percent. That's the new price for new customers so people that don't know any better. You know know your first price. Best the price they know and four returning customers. It's fifteen percent and you can mention this to your returning customer. Because a hey buy. New prices are twenty percent higher. My new rate is such and such but I can give you a return customer discount so it will be so so and so it'll be only fifteen percent more the shows that you respect loyalty and appreciate their business and then hey you're giving them a little something special. How much should you increase. Will it depends on how often you increase your rates. Let's say for example you're increasing. Every year i would say no less than five percent and no more than twenty percent any more than twenty percent. Twenty five thirty It becomes a dramatic jump. This is why it's more Advisable to increase their prices every year rather than waiting every two or three years because then the jumps are going to be quite high but even fifteen or twenty percent increase may not seem too high but will make a big difference for you for all your clients so say for example. You're alary fifty dollars. A twenty percent increase is only going up to sixty dollars but across all your hours across all your customers. It makes a significant difference now. One of the things i recommend is when you're delivering the change of rate to are turning customer. You can offer them to lock in a longer term package for example to have you on retainer so say for example you say hey. My hourly rate is now a hundred dollars. is usually increased my rates every twelve to eighteen months. But if you'd like you can lock in this rate for the next two years if you want to. But you'll need to commit to a certain amount of hours on retainer month so you might say i need to have ten hours on retainer every month. That means a thousand dollars every month. That means a twenty four thousand dollars for thirty two years and this can just be a retainer Four any kind of work that they need to do Maintenance work update work and then anything outside the retaining hours you can charge them early at the current rate and people that like to work with you would like to lock in a great rate that they can have and have predictable pricing for the next couple years. This could be done in a very low pressure just by the way. Here's something that i offer and you'll be surprised. How many of your customers. We'll take you up on it. Because people like to save money. People liked to lock in a discount more on today's cuny wednesday but before that. Let me love to sponsor support for today. Show comes from our very own whether ninja looking for a webinar platform to host. 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We run a live webinar demo and we walk through everything whether or ninja has to offer. So you can find out if it's the perfect weather nor software for you. Just go to webinar. Ninja dot com slash workshop. To sign up for our next live demo. Again that's webinar. Ninja dot com slash workshop to answer. Doug question on cuny wednesday halston. Should i raise my rates. Well like i said you shouldn't wait more than eighteen months. The sweet spot is anything between every twelve and eighteen months and you can increase it as low as five percent up to twenty percent and as long as you consistently do this. Every twelve to eighteen months you'll continue to be able to charge more and earn more based on your increased value. Great question doug thanks so much asking it here on kuni wednesday if you have a question you want to ask just emailing over at at one zero zero. Mba dot net n. Will answer it right here on cuny wednesday. Thanks so much for listening to the hundred dollar. Mba show if you love what here shared this show with your friends on social media share linked to it or even just take a screenshot and tell people about one hundred ambi- show in wine love so much before we go. I wanna leave you with this. Many people often think price is a bigger factor than it actually is. You'll be surprised. Many people are willing to pay more money. If they're going to get what they want if they're going to get the result of looking for an increase maybe an increment of price. That is really not gonna make a huge difference between going with you. Go with your competitor. They really wanna just no. Will you give me what i'm expecting. So sell them on the value. Seldom on what you can deliver. Show them what you've done in the past more value convey no matter what your prices the more that price becomes a bargain. Thanks so much for listening. Check you into mars episode. I'll see you then take care